Trade

Trade

I bought a 1% position in NovaGold. The good news is they are a gold exploration company with 15 million oz.'s of reserves. They have a 50% partnership with Barrick at a mine called Donlin Creek. They also have some other stuff. That's the good news. The bad news is that they have a liquidity crisis. They've breached loan convenants and one or more of their mines might be foreclosed on. They may have to liquidate, which would make the stock worthless. They also have a management problem, as Barrick offered a $16/share buyout earlier this year, which they turned down.

But at $0.46, their gold in the ground costs $3 an ounce. Barrick costs $190/oz in the ground. Goldcorp costs $395/oz in the ground.

Does cost per oz in the ground mean anything? I just made it up, so probably not. But at $0.46, I'm willing to gamble. If they survive, it will be a home run.